Question

Equivalent Units and Related Costs; Cost of Production Report; Entries

Dover Chemical Company manufactures specialty chemicals by a series of three processes, all materials being introduced in the Distilling Department. From the Distilling Department, the materials pass through the Reaction and Filling departments, emerging as finished chemicals.

The balance in the account Work in Process—Filling was as follows on January 1:

Work in Process—Filling Department
(4,600 units, 30% completed):
	Direct materials (4,600 x $11.70)	$53,820
	Conversion (4,600 x 30% x $7.50)	10,350
		$64,170

The following costs were charged to Work in Process—Filling during January:

Direct materials transferred from Reaction
	Department: 59,300 units at $11.40 a unit	$676,020
Direct labor		238,560
Factory overhead		229,206

During January, 58,800 units of specialty chemicals were completed. Work in Process—Filling Department on January 31 was 5,100 units, 50% completed.

Required:

1. Prepare a cost of production report for the Filling Department for January. If an amount is zero, enter "0". If required, round your cost per equivalent unit answers to two decimal places.

Dover Chemical Company
Cost of Production Report-Filling Department
For the Month Ended January 31
Unit Information
Units charged to production:
Inventory in process, January 1
Received from Reaction Department
Total units accounted for by the Filling Department
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, January 1	--------	----------	--------
Started and completed in January	---------	----------	------
Transferred to finished goods in January	-----------	-----------	-----------
Inventory in process, January 31	------------	-----------	---------
Total units to be assigned costs	----------	----------	------
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for January in Filling Department		$	$
Total equivalent units
Cost per equivalent unit		$	$
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, January 1			$
Costs incurred in January
Total costs accounted for by the Filling Department			$
Cost allocated to completed and partially completed units:
Inventory in process, January 1 balance			$
To complete inventory in process, January 1	$	$
Cost of completed January 1 work in process			$
Started and completed in January
Transferred to finished goods in January			$
Inventory in process, January 31
Total costs assigned by the Filling Department			$

3. Determine the increase or decrease in the cost per equivalent unit from December to January for direct materials and conversion costs. If required, round your answers to two decimal places.

	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit		$
Change in conversion cost per equivalent unit		$

4. The cost of production report may be used as the basis for allocating product costs between   and  . The report can also be used to control costs by holding each department head responsible for the units entering production and the costs incurred in the department. Any differences in unit product costs from one month to another, such as those in part (3), can be studied carefully and any significant differences investigated.

Answer 1

Dover Chemical Company
Cost of Production Report-Filling Department
For the Month Ended January 31
Unit Information
Units charged to production:
Inventory in process, January 1			4600
Received from Reaction Department			59300
Total units accounted for by the Filling Department			63900
Units to be assigned costs:
		Equivalent Units
	Whole Units	Direct Materials	Conversion
Inventory in process, January 1	4600	0	3220
Started and completed in January	54200	54200	54200
Transferred to finished goods in January	58800	54200	57420
Inventory in process, January 31	5100	5100	2550
Total units to be assigned costs	63900	59300	59970
Cost Information
Costs per equivalent unit:
		Direct Materials	Conversion
Total costs for January in Filling Department		676020	467766
Total equivalent units		59300	59970
Cost per equivalent unit		11.40	7.80
Costs charged to production:
	Direct Materials	Conversion	Total
Inventory in process, January 1			64170
Costs incurred in January			1143786
Total costs accounted for by the Filling Department			1207956
Cost allocated to completed and partially completed units:
Inventory in process, January 1 balance			64170
To complete inventory in process, January 1	0	25116	25116
Cost of completed January 1 work in process			89286
Started and completed in January	617880	422760	1040640
Transferred to finished goods in January			1129926
Inventory in process, January 31	58140	19890	78030
Total costs assigned by the Filling Department			1207956
3
	Increase or Decrease	Amount
Change in direct materials cost per equivalent unit	Decrease	0.30	=11.7-11.4
Change in conversion cost per equivalent unit	Increase	0.30	=7.8-7.5
4
The cost of production report may be used as the basis for allocating product costs between Work in Process and Transferred-Out